Mohan Lal Sharma & Ors vs State & Anr
2015 Latest Caselaw 9481 Del

$~35
*       IN THE HIGH COURT OF DELHI AT NEW DELHI
+                          CRL.REV.P. 596/2015
                                     Date of decision: 21.12.2015
        MOHAN LAL SHARMA & ORS             ..... Petitioners
                    Through  Mr.Joy Basu, Sr. Adv. with
                             Mr.Aman Sareen, Mr.Abhinav
                             & Mr.Angad, Advs. with
                             petitioner in person.

                           versus

        STATE & ANR                               ..... Respondents
                           Through     Ms.Alpana Pandey, APP for the
                                       State.
                                       Mr.Vinod Goel, Adv. for R2.

        CORAM:
        HON'BLE MR. JUSTICE ASHUTOSH KUMAR

ASHUTOSH KUMAR, J. (ORAL)

Crl.M.A No.13566/2015 For the reasons shown in the petition, the delay of 35 days in filing the petition is condoned.

The application stands disposed of accordingly. Crl.Rev.P.596/2015 & Crl.M.A. 13564/2015 The revisionists/petitioners have challenged the order dated 15.05.2015 passed by the learned Metropolitan Magistrate (NI Act) in CC No.1140/1 whereby the summons have been issued to them.

The complaint lodged by respondent no.2 interalia alleges that a cheque was issued in favour of respondent no.2 which, on

presentation, was not honoured by the bank. The complaint was filed after the statutory notice was served upon the directors of the company. The revisionists/petitioners are also on the Board of Directors and therefore they were arrayed as accused persons.

Mr.Joy Basu, learned senior counsel appearing for the petitioners, submitted that a bare look at the complaint would make it obvious that only a bald statement regarding the responsibility of the petitioners has been made without specifying as to the specific role played by the revisionists/petitioners in their capacity as directors.

It is submitted that petitioner no.1 was appointed by the BIFR on 04.02.2011 as the Nominee Independent Non-Executive Director on 18.02.2011 and was not at all involved in the routine business affairs of the company.

Similarly, petitioner no.2 was appointed as a director on 11.02.2015 when the cheque in question was issued in the month of December, 2014. Petitioner no.2 had joined her first Board meeting only on 30.05.2015 i.e. after the issuance of summons by the learned MM.

Ajay Gupta (petitioner no.3) is the Company Secretary and General Manager of the company Alps Industries Ltd. He has not been taking part in any one of the directorial as well as the accounts and financial functions of the company and is not at all involved in day-to-day transaction of issuing cheques to parties.

Mr.Vipul Goel, learned counsel appearing for respondent no.2, submits that the complaint lodged by him specifically states the names of the directors including the petitioners who have been

incharge of the company in its day-to-day functioning. He further submits that at the stage of issuance of summons, the petitioners have not made out any case for interference with the orders of the court below for the reason that the Magistrate was only concerned with the facts stated in the complaint petition and in the complaint, apart from other averments, it is clearly stated that the petitioners are on the Board of Directors who are involved in the day-to-day affairs of the company.

Mr. Joy Basu, Ld. Senior Advocate submits that in SMS Pharmaceuticals Ltd. vs. Neeta Bhalla and Anr. 2005 (7) SCALE 397, the Supreme Court has discussed about necessary averments in any complaint under section 138 read with section 141 of the Negotiable Instruments Act. The Supreme Court in the aforesaid case observed as follows:

(a) It is necessary to specifically aver in a complaint under Section 141 that at the time the offence was committed, the person accused was in charge of, and responsible for the conduct of business of the company. This averment is an essential requirement of Section 141 and has to be made in a complaint. Without this averment being made in a complaint, the requirements of Section 141cannot be said to be satisfied.

(b) .... Merely being a director of a company is not sufficient to make the person liable under Section 141 of the Act. A director in a company cannot be deemed to be in charge of and responsible to the company for the conduct of its business. The requirement of Section 141 is that the person sought to be made liable should be in charge of and responsible for the conduct of the business of the company

at the relevant time. This has to be averred as a fact as there is no deemed liability of a director in such cases.

(c) ..... the managing director or joint managing director would be admittedly in charge of the company and responsible to the company for the conduct of its business. When that is so, holders of such positions in a company become liable under Section 141 of the Act. By virtue of the office they hold as managing director or joint managing director, these persons are in charge of and responsible for the conduct of business of the company. Therefore, they get covered under Section 141. So far as the signatory of a cheque which is dishonoured is concerned, he is clearly responsible for the incriminating act and will be covered under sub- section (2) of Section 141."

The same view was taken in National Small Industries Corporation Ltd. vs. Harmeet Singh Pental & Anr. (2010) 2 SCALE

372. It was held by the Supreme Court that:

24. ...if the accused is not one of the persons who falls under the category of "persons who are responsible to the company for the conduct of the business of the company" then merely by stating that "he was in-charge of the business of the company" or by stating that "he was incharge of the day-to-day management of the company" or by stating that "he was in-charge of, and was responsible to the company for the conduct of the business of the company", he cannot be made vicariously liable under Section 141(1) of the Act. To put it clear that for making a person liable under Section 141(2), the mechanical repetition of the requirements under Section 141(1) will be of no assistance, but there should be necessary averments in the complaint as to how and in what manner the accused was guilty of consent and connivance or negligence and therefore, responsible under Sub-section (2) of Section 141 of the Act.

In Anita Malhotra vs. Apparel Exports Promotion Council and Anr., (2012) 1 SCC 520, the Supreme Court has held as hereunder:

"22. This Court has repeatedly held that in case of a Director, complaint should specifically spell out how and in what manner the Director was in charge of or was responsible to the accused Company for conduct of its business and mere bald statement that he or she was in charge of and was responsible to the company for conduct of its business is not sufficient. [Vide National Small Industries Corporation Limited vs. Harmeet Singh Paintal and Another, (2010) 3 SCC 330]. In the case on hand, particularly, in para 4 of the complaint, except the mere bald and cursory statement with regard to the appellant, the complainant has not specified her role in the day to day affairs of the Company. We have verified the averments as regard to the same and we agree with the contention of Mr. Akhil Sibal that except reproduction of the statutory requirements the complainant has not specified or elaborated the role of the appellant in the day to day affairs of the Company. On this ground also, the appellant is entitled to succeed."

It has submitted that a bench of this Court in Chintan Arvind Kapadia & Anrs. vs. State and Anrs. ILR 2013 III Delhi 2135 quashed the summoning of the directors on the ground that the complaint merely included bald statement regarding their responsibilities in the company and not the specific role which was played by them in the company.

Taking the aforesaid view of the Supreme Court into account and faced with a situation when there was an upsurge of mechanical issuance summons in cases involving NI Act, a bench of this court in Sudeep Jain vs. M/s ECE Industries Ltd. 2013 (201) DLT 461

directed that the magistrates must seek copies of Form 32 from the complainant to prima facie satisfy the court as to who were the directors of the accused company at the time of commission of the alleged offence and on the date of filing of the complaint case. In addition to this, the magistrates are also directed to seek information as given in a table, quoted below which is to be annexed by the complainant on a separate sheet accompanying the complaint.

"a. Name of the accused Company;

b. Particulars of the dishonoured cheque/cheques; Person/Company in whose favour the cheque/cheques were issued  Drawer of the cheque/cheques  Date of issuance of cheque/cheques  Name of the drawer bank, its location  Name of the drawee bank, its location  Cheque No. /Nos  Signatory of the cheque/cheques c. Reasons due to which the cheque/cheques were dishonoured; d. Name and Designation of the persons sought to be vicariously liable for the commission of the offence by the accused Company and their exact role as to how and in what manner they were responsible for the commission of the alleged offence; e. Particulars of the legal notice and status of its service;

f. Particulars of reply to the legal notice, if any."

On a query by the Court as to whether the issuance of summons by a Magistrate in a summary trial is revisable, learned senior advocate submitted that the issue is settled by a line of decisions and in Om Kumar Dhankar vs. State of Haryana, 2012 (11) SCC 252, the Supreme Court, taking into account all the earlier decisions held that

"it would not be appropriate to hold that an order directing issuance of process is purely interlocutory and, therefore, the bar under sub- section (2) of Section 397 would apply. On the other hand, it must be held to be intermediate or quasi-final and, therefore, the revisional jurisdiction under Section 397 could be exercised against the same."

It was thus contended by Mr.Basu, that the Magistrate while issuing summons has abdicated his functions in not enquiring from the complainant as to the exact role played by the petitioners.

Mr.Goel, learned counsel for the respondent no.2, seeks time to respond to the aforesaid contentions raised by the petitioners.

Renotify on 11.01.2016.

Till further orders, the proceedings before the Court below shall remain stayed.

ASHUTOSH KUMAR, J DECEMBER 21, 2015 ab